Responding to the Panama Papers

Or, how a mild-mannered accountant helped protect New Zealand’s economy

John Shewan fits most people’s expectations of a tax accountant: reserved, brain the size of a planet, and a measured composure. John became something of a reluctant superhero when he was appointed by the New Zealand Government to carry out an independent inquiry to check whether the rules covering New Zealand-based overseas trusts are fit for purpose or need improving.

The inquiry was a response to the leaked Panama Papers in 2015. John, along with his equally modest and understated co-speaker Raj Krishnan, General Manager of the Department of Internal Affairs Regulatory Services, outlined the lessons from the inquiry and government agencies’ response to the Panama Papers at the Transparency International Leaders Integrity Forum in March.

Despite initial public and media concern about the terms of reference for the inquiry, it was clear to John from the outset that his inquiry needed to address no lesser risk than New Zealand’s international reputation. John saw the information being leaked to the media by those holding the full set of Panama Papers as having real potential to damage our international reputation and, as a result, our economy.

Speed was of the essence, and John’s inquiry was completed in less than three months. He challenges those of us who also carry out inquiries to draw lessons from the timeliness of his inquiry. One of the reasons speed was possible, he said, was the base of co-operative work practices, relationships, and information-sharing between the government agencies involved. Throughout our work at the Office of the Auditor-General, we also see better and timelier results when agencies collaborate and share information to achieve a common goal. We’ve raised this in some of our recent reports, including Education for Māori: Using information to improve Māori educational success and our reflections reports about Service delivery and Our future needs.

At the Forum, John conveyed bemusement about the storm of curiosity surrounding his inquiry in the media. Technocrat to the core, his initial instinct was to put his head down, do his work, and ignore the attention. Only when he realised that this storm had the potential to undermine confidence in his inquiry did John recognise that he also had a role to publicly communicate the facts about the inquiry’s purpose and scope.

John reflected on the critical importance of the terms of reference for any inquiry noting the tricky balance between making these broad enough to deal thoroughly with the issues at hand but not so broad that prompt reporting and remedial action is rendered impossible. He considered that the terms of reference for his inquiry were about right, with the 20 recommendations receiving support across Parliament and legislated within nine months of the reporting date.

Raj outlined the effort of the agencies involved with foreign trusts (the Treasury, the Ministry of Justice, Inland Revenue, the New Zealand Police, and the Department of Internal Affairs) in supporting the Government’s response to the Panama Papers. The second phase of this response, for which these agencies are now preparing, involves the extension of anti-money-laundering rules to advisors such as accountants and lawyers. John felt that the rules had been too open until now, and he told the Forum that he was pleased to see work progressing on this final aspect of his recommendations. So the inquiry’s speed has been matched by an equally speedy response by the agencies, which has ultimately helped prevent damage to New Zealand’s reputation and economy.

At the end of the Forum, someone speculated that John will be called on in the future for similar reviews. Like any superhero, it’s good to know that John and people like him are there. But even better is knowing that Raj and the staff of agencies involved in foreign trusts – from policy to enforcement – join up their work and information to help maintain New Zealand’s international reputation and our economy. Our standards of integrity and our way of life are the better for this quiet, effective work.